Understanding Key Financial Metrics for Non-Finance Employees
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There are various ways to examine the performance and potential of a business. In the past, most common way to assess this was through looking at the financial health of the company. Current methods, however, often take a more comprehensive approach. For instance, two popular methods are the balanced scorecard approach - capturing learning, internal processes, finance, and customer related metric (Tarver, 2024), and the triple bottom line - examining items related to people, profit (finance), and place (Kenton, 2024). Regardless of the approach, financials still play a role. Despite this, it is proposed here that many people in an organization do not understand the financial status of their organization or division or department.
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My colleagues and I have anecdotal evidence from in depth case research that, given the right conditions, when all employees (from line employees to the c-suite) better understand financials, employees can approach their jobs with these in mind and can improve performance. A good starting point is to understand key financial metrics, which is what this minicourse intends to assist with.
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Kenton, W. (May 24, 2024) Triple Bottom Line. Retrieved from https://www.investopedia.com/terms/t/triple-bottom-line.asp​
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Tarver, E. (February 24, 2024). What Is a Balanced Scorecard (BSC), How Is It Used in Business? Retrieved from https://www.investopedia.com/terms/b/balancedscorecard.asp
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Two Learning Theories That Could Influence This Course
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​​​Finance uses a lot of mathematics, and the bulk of what students are learning in this minicourse revolves around doing calculations and interpreting the inputs and output of these calculations. As such learning theories that lend themselves well to learning mathematics would likely work well for guiding this course. In a study comparing different learning theories used in mathematics teaching Lessani, et al. (2016) found that cognitivism and constructivism lead to better learning outcomes. Specifically, problem-solving and discovery-learning skills were helpful.
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Cognitive Learning Theory concerns mental processes and an active approach to learning (Malstrom, 2023).
One aspect of this theory that may enhance effective learning is the concept of cognitive load. The nature of this course, being a minicourse, is aligned with this concept. Additionally, the problem-solving emphasis of this theory can be aligned with truly understanding financial ratios (not just being able to calculate them). One aspect of this theory that may impede effective learning is that is it multi-faceted with many overlapping, but still distinct concepts. This could make it difficult to lay out a clear path for learning design and ultimately effect learning.
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Implications of this theory for this mini-course could be to scaffold - starting with more assistance and letting the students take on more on their own toward the end of the course modules. From the standpoint of learning activities, this theory could mean limiting lectures and focus on activities like doing calculations and analyzing cases.
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Constructivist Learning Theory is student-centered and relies on the creation of an environment where students to think on their own (Mcleod, 2024).
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Similar to cognitivism, one aspect of this theory a focus on problem-solving (such as with determining financial health from financial statements) may enhance effective learning. Differentiation as an aspect of cognitivism may also be beneficial. Some learners may come in knowing more about or being more comfortable with finance than others. The social aspect of constructivism may impede learning effectiveness in this course. I have seen anecdotal evidence of social loafing in situations regarding learning finance in groups.
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Implications for this mini-course would be to allow students to practice more basic concepts as they feel necessary. Additionally, the course limit lectures and focus on activities that draw on the learners knowledge of their business.
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Lessani, A., Yunus, A., Bakar, K., & Khameneh, A. (2016). Comparison of Learning Theories in Mathematics Teaching Methods. Fourth 21st CAF Conference. 9 (1): 165-174.
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Malstrom, H. (June 29, 2023). Cognitive Learning Theory. Retrieved from https://training.safetyculture.com/blog/cognitive-learning-theory/
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Mcleod, S. (February 1, 2024). Constructivism Learning Theory & Philosophy of Education. Retrieved from https://www.simplypsychology.org/constructivism.html